MBO (Management by Objectives) method is followed by

Atlas Honda for performance evaluation.

ADVANTAGE:
Documentation
It provides documentation of employee performance during a specific period. This is a piece of
paper that can be placed in the employee file.

Structuring
This process creates a structure in which managers can meet with employees and discuss
performance. It forces uncomfortable conversations that are often required.

Right Placement
It helps to identify areas where employees are competent. Basically, this process is useful for
determining the true potential and interest of employees. This analysis helps the human resources
department to assign appropriate jobs based on the skills and abilities of the employees.

Motivator
It improved their morale and confidence. In addition, a better understanding of their true
potential will motivate employees to perform at their best. The organization recognizes
employees’ efforts by giving higher salaries, higher responsibilities, certificates, and other
monetary and non-monetary benefits. These benefits and recognition also motivate other
employees to perform better at work.

Planning and Designing Training Programs:

Evaluating the strengths and weaknesses of employees is useful for planning and designing
training programs for the human resources department. Employees receive the right training at
the right time to overcome their weaknesses and develop their strengths. The content and
methods of training can be modified according to human resource needs.
DISADVANTAGES
Horn & Halo Effect
The behavior of only looking at the negative aspects and ignoring the positive aspects of people
is called the "horn effect." This happens when the appraiser makes a decision based solely on the
negative attributes of the employee. For example, the evaluator's overall evaluation of employees
is low, because he is too concerned about employees' lack of communication and expression
skills.

Time Consuming Process

Every manager or supervisor is responsible for preparing performance reports for their team
members. He needs to fill out an evaluation form for each team member and write down the
strengths, achievements, weaknesses and other observations of the team members. This process
includes many processes and is a time-consuming process.

Central Tendency

Regardless of the actual performance of employees, managers tend to give employees an average
score. This means that both under-performing companies and higher-performing companies are
given an average score. Usually, managers take this behavior to avoid dissatisfaction with other
employees, future conflicts, jealousy, and team tension. However, this is unfair to employees
who actually deserve high scores but get average scores.

Inadequate Attention to Human Resource Development

The main purpose of the evaluation system is to evaluate the performance of employees in their
current work so that they can be motivated and further developed. However, performance reports
may not be actually used by managers to achieve this goal. The manager prepares these reports
only for fulfilling the duties and obligations of the company policy. They may not always take
the time to evaluate the actual performance of employees and develop their capabilities.